Bruce Campbell is president of Campbell, Lee & Ross Investment Management. His focus is Canadian large caps.
Martinrea Int’l Inc.
Recently purchased in the mid-8’s for the first time. The auto parts maker has had some negative press with a member of former management suing the company and a writedown from one plant back to a few years ago. This has caused the stock to trade down to only 6x earnings. We like the outlook for the industry and the stock has gone down so much we are willing to take the short-term risk as this is not fundamental to the ongoing business.
Bought at $97 recently for new clients. We have owned for years. A way to get further U.S. exposure in a Canadian bank. Their U.S. banking is approaching 50 per cent of the total and continues to grow nicely and improve its ROE.
General Electric Co.
Bought recently at $27 (U.S.) for new clients, owned for several years. GE is a great way to get U.S. and international exposure to the global growth story on the industrial side. Largest solar company in the world and good European exposure.
Past Picks: January 30, 2013
Crescent Point Energy
Then: $38.68; Now: $40.15; Total return: +10.79 per cent
Bank of America
Then: $11.38 (U.S.); Now: $16.50; Total return: +45.42 per cent
Then: $26.67; Now: $25.28; Total return: -0.33 per cent
Total return average: +18.63 per cent
The markets have rallied nicely in the back half of 2013 especially. Earnings growth is moderate but should pick up a little bit in 2014, providing good fundamental support for North American markets. However, not all groups are equally attractive and stock picking at this stage of the market cycle will be much more important than last year. Canadian markets have started to pick up and if global growth does beat the U.S. growth as expected, this should bode well for the TSX. Late-cycle groups including energy, financials, technology and health care should do well. Growth is now more important than just yield in this environment.